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Economic Convergence and Rent-Seeking in Iran

Christian Dreger (), Teymur Rahmani and Hans-Friedrich Eckey

No 741, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The neoclassical growth model predicts convergence of productivity or per capita output levels across regions. If participation in the labor force is constant, convergence of per capita income is implied. We investigate this hypothesis for the Iranian economy using data on demand deposits as a proxy for GDP. Furthermore, the analysis controls for the effects of rent seeking. Due to its impact on the allocation of resources, rent-seeking is likely an impediment to overall growth. The results support absolute ß-convergence across Iran's provinces and provide some evidence on the adverse effect of rent seeking on regional convergence.

Keywords: Regional convergence; rent-seeking; economic growth (search for similar items in EconPapers)
JEL-codes: O43 O47 R11 (search for similar items in EconPapers)
Pages: 25 p.
Date: 2007
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